# Amicus Curiae Brief — Rimini St., Inc. v. Oracle USA, Inc., 139 S. Ct. 783 (2019) (No. 17-1625)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2019

## Text

No. 17-1625

IN THE
Supreme Court of the United States

RIMINI STREET, INC., ET AL.,

Petitioners,
We

ORACLE USA, INC., ET AL.,
Respondents.

On Writ of Certiorari to the
United States Court of Appeals for the Ninth Circuit

BRIEF FOR THE NATIONAL MUSIC
PUBLISHERS’ ASSOCIATION AND
RECORDING INDUSTRY ASSOCIATION OF
AMERICA, AS AMICI CURIAE IN SUPPORT OF
RESPONDENTS

Jacqueline C. Charlesworth Beth S. Brinkmann

COVINGTON & BURLING LLP Counsel of Record

620 Eighth Avenue Rafael Reyneri

New York, NY 10018 COVINGTON & BURLING LLLP

(202) 841-1000 850 Tenth Street, NW

jcharlesworth@cov.com Washington, DC 20001
(202) 662-6000
bbrinkmann@cov.com

December 20, 2018 Counsel for Amici Curiae

TABLE OF CONTENTS

Te Ce Bs ee i acincccceseceencenscosccccscsncssesess iii
INTEREST OF AMICI CURIAE .........................-.--++- 1
SUMMARY OF ARGUMENT.......0000000...0...-..e cece 3
IE Chcitiuhindtienibnistesshdaiiidiinmaniseiaenniaeatnesd 6

I. The Cost of Enforcing Music Copyrights
Through Litigation Can Be Prohibitive. ............ 6

A. Litigation Costs Are a Barrier to

Enforcement of Music Copyrights. .............. 6

B. Widespread Online Infringement Has
Significantly Exacerbated the
Adverse Impact of the High Costs of
Copyright Litigation................................... 10

Il. The Ability to Recover Full Costs Is
Necessary to Mitigate the Expense of
Protecting Music Copyrights. ........................... 13

A. Awarding Full Costs Provides the
Proper Incentive Needed for

B. Defendants and Claimants in
Smaller Copyright Cases Also Rely
on the Ability to Recover Full Costs. ......... 16

1. Defendants Need Full Cost
Recovery as a Deterrent to
Meritless Litigation ............................. 16

2. Absent the Ability to Recover Full
Costs, Music Litigants May Lose
More Than They Win........................... 18

SET PE Siirtinnivnicdetessisadioniensicnninsinnnsnnnstdnttantseptitenastiaiel

iii
TABLE OF AUTHORITIES
Page(s)

Cases

Berry v. Deutsche Bank Trust Co. Americas,
632 F. Supp. 2d 300 (S.D.N.Y. 2009)................... 15

BMG Rights Mgmt. (US) LLC v. Cox
Comme'ns, Inc.,
149 F. Supp. 3d 634 (E.D. Va. 2015)............. 12, 13

BMG Rights Mgmt. (US) LLC v. Cox
Commce'ns, Inc.,
234 F. Supp. 3d 760 (E.D. Va. 2017) ............. 12, 13

Capitol Records, Inc. v. MP3tunes, LLC,
No. 07-cv-9931, 2015 WL 13684546
ES Eee 5, 14

Capitol Records, Inc. v. MP3tunes, LLC,
No. 07-cv-9931, 2015 WL 7271565
Ff 8 ee 00) 6, 14, 15

Capitol Records, Inc. v. MP3tunes, LLC,
No. 07-cv-9931 (S.D.N.Y. Jan. 26, 2018)............. 15

In re Charter Commce’ns, Inc., Subpoena Enft
Matter,
383 F.3d 771 (Oth Cir. BOO6)............00.00..2...0000000e: 10

Crawford Fitting Co. v. J. T. Gibbons, Inc.,
IS casilcetbiaion 4,8

iv

Gakm Resources LLC v. Jaylyn Sales Inc.,
No. 08-cv-6030, 2009 WL 2150891
Fk a 15

Mayimba Music, Inc. v. Sony/ATV Latin
Music Publishing LLC,
No. 12-cv-1094 (S.D.N.Y. Mar. 31, 2016)............ 18

Mayimba Music, Inc. v. Sony/ATV Latin
Music Publishing LLC,
No. 12-cv-1094 (S.D.N_Y. June 9, 2016).............. 18

Nature’s Enters., Inc. v. Pearson,
No. 08-cv-8549, 2010 WL 447377 (S.D.NLY.

| SIRES EES Se SE NN ee 15
Pringle v. Adams,

No. 10-cv-01656, 2014 WL 3706826 (C.D.

I a sestmssons 17

Recording Indus. Ass’n of Am., Inc. v. Verizon
Internet Servs., Inc.,
351 F.3d 1229 (D.C. Cir. 2003)............................ 10

Skidmore v. Led Zeppelin,
No. 15-cv-03462, 2016 WL 6674985 (C.D.
a cestsbonnes 8

Tempest Publ’g, Inc. v. Hacienda Records &
Recording Studio, Inc.,
141 F. Supp. 3d 712 (S.D. Tex. 2015)......000000...... 19

Twentieth Century Fox Film Corp. v. Entm’t
Distrib.,
429 F.3d 869 (9th Cir. 2005)................................ 17

v

U.S. Media Corp. v. Edde Enim'’t, Inc.,
No. 94-cv-4849, 1999 WL 498216 (S.D.N_Y.

Ee ee isestincaatacesmsensteuienntetnecccecensscceseseers

Washingtonian Publ’g Co. v. Pearson,

Fe Gi I ieccenrcceecscssnsscmnsstccsocesonscossccoes

Williams v. Bridgeport Music, Inc.,
No. 13-cv-06004, 2016 WL 6822309 (C.D.

a ccccsneeene

Statutes

i lecienian
a clcuebvoninanipll
i eutnmemnsi
Act of Feb. 26, 1853, ch. 80, 10 Stat. 161.............

Copyright Act of 1831, ch. 16, § 12, 4 Stat. 436...

Copyright Act of 1909, ch. 320, § 40, 35 Stat.

SIIIED tcecsisinsienandintscsssnesncsintnétipienannnstactimeantnivumeesees

BIEN iicichcneinnsisprenstinesacncnenaenhinaseninimcnpecineninsinite

Other Authorities
Am. Intellectual Prop. Law Ass’n, Report of the

Economic Survey 2011 (2012)..................2.......

Admin. Office of the U.S. Courts, Judicial
Business of the United States Courts: 2011

Annual Report of the Director (2012) ..............

—

a, 7

vi

Shyamkrishna Balganesh, Copyright
Infringement Markets, 113 Colum. L. Rev.
OE Ce vckinccttitescsincsapimniisncigiasiiadeumiasaiestagsthian 4,7

U.S. Copyright Office, Copyright Small Claims
(Sept. 2013),
https://www.copyright.gov/docs/smalliclaims
/usco-smallcopyrightclaims.pdf ............. 3, 9, 10, 19

l
INTEREST OF AMICI CURIAE'

Amici curiae the National Music Publishers’ Asso-
ciation (“NMPA”) and the Recording Industry
Association of America (“RIAA”) are leading music
trade organizations representing the interests of mu-
sic copyright owners, including music publishers,
record companies, and music creators. Amici’s mem-
bers depend upon the rights conferred by the
Copyright Act—in particular, the right to enforce
their copyrights through litigation—to protect the
works they create, invest in, license, and distribute.

NMPA is the principal trade association represent-
ing the U.S. music publishing and songwriting
industry. Over the last 100 years, NMPA has served
as a leading voice representing American music pub-
lishers before Congress, in the courts, within the
music, entertainment, and technology industries, and
to the listening public. NMPA’s membership includes
major music publishers affiliated with record labels
and large entertainment companies as well as inde-
pendently owned and operated music publishers of all
catalog and revenue sizes. Compositions owned or
controlled by NMPA’s hundreds of members account
for the vast majority of musical works licensed for
commercial use in the United States.

RLAA is a nonprofit trade organization represent-
ing the American recording industry. RIAA supports

' No party or counsel for any party authored any part of this bref
or made a monetary contribution intended to fund the prepara-
thon or submission of this bref. All parties have provided blanket
consent to the filing of amicus brnefs.

2

and promotes the creative and financial vitality of the
major recorded music companies. Its members are the
music labels that comprise the most vibrant record in-
dustry in the world. RIAA members create,
manufacture, and/or distribute approximately 85 per-
cent of all legitimate recorded music produced and
sold in the United States. In support of its members,
the RIAA works to protect the intellectual property
and First Amendment rights of artists and music la-
bels, and monitors and reviews state and federal laws,
regulations, and policies.

The question presented in this case bears directly
on the ability of Amici and their members to protect
copyrighted musical works and sound recordings
against unauthorized use. The digital distribution of
music has changed the industry in myriad ways, in-
cluding by vastly expanding the incidence and scale of
music piracy. A music copyright lawsuit may now in-
volve thousands of copyrighted works and over a
million acts of infringement, and give rise to compli-
cated technical questions that require expert
resources to address. As a result, in the experience of
Amici and their members, the cost of enforcing music
copyrights through litigation has risen dramatically.
The ability to recover not only attorneys’ fees but also
the actual costs of litigation, as provided under Sec-
tion 505 of the Copyright Act, is therefore critical to
efforts to combat infringement.

Section 505 permits a prevailing copyright litigant

to recover the “full costs” of the action, including “a
reasonable attorney's fee,” in the court’s discretion.

3

17 U.S.C. § 505. Seeking to overcome the plain mean-
ing of this provision, petitioners assert that “full costs”
should be read to mean only those costs taxable under
the default rule of 28 U.S.C. § 1920. Such a narrow
and counterintuitive interpretation of Section 505
would seriously erode the efforts of Amici and their
members to protect the value of their copyrighted
works by seeking legal redress for infringement.

Music copyright owners rely on the ability to seek
recovery of the full range of litigation expenses as pro-
vided in the Copyright Act, especially in pursuing
large-scale or complex infringement actions. If peti-
tioners’ constricted interpretation were to prevail, it
would eliminate courts’ discretion to award meaning-
ful costs to prevailing plaintiffs and undermine the
practical ability to take action against music piracy.
Amici respectfully request that the Court affirm the
decision below and confirm that the Copyright Act
means what it says and allows trial courts the discre-
tion to award full costs, not just those enumerated in
28 U.S.C. § 1920.

SUMMARY OF ARGUMENT

This Court observed nearly 80 years ago that a cop-
yright is of no value to its owner if it cannot be
effectively enforced in the courts. Washingtonian
Publ'g Co. v. Pearson, 306 U.S. 30, 39-40 (1939). How-
ever, the cost of pursuing infringement litigation in
federal court is significant and at times prohibitive.
The Copyright Office has found that “[cjopyright own-
ers whose works are infringed often are deterred from
enforcing their rights due to the burden and expense
of pursuing litigation in the federal system.” U.S.

4

Copyright Office, Copyright Small Claims, at 24
(Sept. 2013), https://www.copyright.gov/docs/small-
claims/usco-smallcopyrightclaims.pdf. The cost of
copyright litigation has been estimated to be “well
over three times the already high average cost of liti-
gation.” Shyamkrishna Balganesh, Copyright
Infringement Markets, 113 Colum. L. Rev. 2277, 2285
(2013).

To mitigate these costs and ensure that copyright
owners are properly reimbursed and incentivized to
protect their creative works, Congress has repeatedly
reaffirmed the longstanding practice of shifting costs
in appropriate cases. For almost two centuries, the
Copyright Act has permitted courts to award full costs
to prevailing parties. See Copyright Act of 1831, ch.
16, § 12, 4 Stat. 436, 438-39; Copyright Act of 1909,
ch. 320, § 40, 35 Stat. 1075, 1084; Copyright Act of
1976, Pub. L. No. 94-553, 90 Stat. 2541, 2586. Signif-
icantly, the “full costs” provision of the Copyright Act
predates the enactment of the Fee Act of 1853, which
established the default federal rule for costs and that
is today embodied in 28 U.S.C. § 1920; Congress has
not seen the need to alter the more specific rule for
copyright cases. See Act of Feb. 26, 1853 (“Fee Act”),
ch. 80, 10 Stat. 161, 161; Crawford Fitting Co. v. J. T.
Gibbons, Inc., 482 U.S. 437, 440 (1987).

The high cost of copyright litigation is a concrete
and serious issue for the music industry. Just as the
digital era has transformed the distribution of music,
it also has transformed music piracy. Litigation costs
for copyright actions, in particular those involving
online infringement, have increased dramatically. A

5

single case can involve over a million acts of infringe-
ment and implicate complicated technical questions
that require costly factual discovery and expert testi-
mony. For example, in BMG Rights Management
(US) LLC v. Cox Communications, Inc., a jury found
an internet service provider liable for copyright in-
fringement and awarded BMG $25 million in
statutory damages. BMG sought to recover its full
costs, amounting to nearly $3 million, the bulk of
which were expert fees. The district court denied
BMG’s request for these fees, opining that “nontaxa-
ble” costs could not be recovered. Such a result is
inconsistent with the clear discretion afforded trial
courts under the Copyright Act to award full costs to
a prevailing litigant.

In the face of escalating litigation costs, music in-
dustry litigants rely on the ability to recover their full
costs when appropriate. Without such a recovery, the
costs incurred to litigate an infringement case may be
eae totus oad eem

. Take, for instance, the case of Capitol Records,
ns v. MP3tunes, LLC, in which music company plain-
tiffs sued an online music service for online
infringement. No. 07-cv-9931, 2015 WL 13684546, at
*1 (S.D.N_Y. Apr. 3, 2015). After a lengthy trial, a jury
delivered a resounding win to the music companies,
awarding tens of millions in damages. Jd. However,
to secure this victory, the prevailing plaintiffs were
forced to incur over $12 million in attorneys’ fees and
litigation expenses. Id. at *3. To mitigate their out-
lay, the music industry plaintiffs sought to recover
just over $4 million in attorneys’ fees and costs, in-
cluding approximately $700,000 in “nontaxable” costs

6

for expert fees and other expenditures. See Capitol
Records, Inc. v. MP3tunes, LLC, No. 07-cv-9931, 2015
WL 7271565, at *1 (S.D.N.Y. Nov. 12, 2015). The
court largely refused to grant the “nontaxable” costs,
however.

These cases illustrate why the ability to seek full
costs—that is, the true costs of litigation—is neces-
sary to preserve the proper balance of incentives in
the copyright system. Without the ability to recover
full costs, music industry plaintiffs will be left under-
compensated and unable to pursue claims against the
most threatening infringers.

The ability to recover costs in defending against
baseless claims is also critical. Music publishers and
record labels at times are called upon to defend
against meritless copyright infringement litigation.
The ability to seek full costs not only serves to com-
pensate parties who must respond to such frivolous
actions, but also to deter bad-faith actors who face the
risk of paying those costs as a losing party.

ARGUMENT

I. The Cost of Enforcing Music Copyrights
Through Litigation Can Be Prohibitive.

A. Litigation Costs Are a Barrier to En-
forcement of Music Copyrights.

It is critically important for the owners of musical
works and sound recordings to be able to enforce their
copyrights by taking legal action when they have been

7

infringed. The value of musical works and sound re-
cordings declines when the cost of copyright
enforcement rises. As this Court observed nearly 80
years ago, a copyright is of no value to its owner if it
cannot be effectively enforced in the courts. Washing-
tonian Publ’g Co. v. Pearson, 306 U.S. 30, 39-40
(1939).

The costs of pursuing infringement litigation, how-
ever, are significant and at times prohibitive. It has
been estimated that the average cost to a party of lit-
igating a copyright case through trial ranges from
$350,000 to over $1.3 million. Am. Intellectual Prop.
Law Ass’n, Report of the Economic Survey 2011, at 35
(2012). One scholar recently concluded that the cost
of copyright litigation is “well over three times the al-
ready high average cost of litigation.” Shyamkrishna
Balganesh, Copyright Infringement Markets, 113
Colum. L. Rev. 2277, 2285 (2013). Moreover, as these
costs have increased in recent years, there has been a
marked decrease in the number of litigated copyright
cases—a 60 percent drop from 2005 to 2011. /d. at
2288-89 (citing Admin. Office of the U.S. Courts, Ju-
dicial Business of the United States Courts: 2011
Annual Report of the Director 130 (2012)).

Especially in a case of online infringement, many
of the most significant issues—for example, proof of
copying or distribution and the alleged infringer’s de-
gree of knowledge—require fact-intensive analysis
that, in turn, depends upon extensive discovery and
expert testimony. At the same time, an infringement
action arising from alleged copying of a single individ-
ual work can require sophisticated testimony by

8
musicologists and market experts.”

The long-established practice of cost-shifting in
copyright actions advances the goals of the copyright
system by ensuring that copyright owners are
properly reimbursed and incentivized to protect their
creative works. Almost two centuries ago, Congress
provided in the 1831 Copyright Act that the prevailing
party in a copyright suit may recover the “full costs”
of the action. See Copyright Act of 1831, ch. 16, § 12,
4 Stat. 436, 438-39. Congress expanded the provision
in 1909 to clarify that attorneys’ fees are to be in-
cluded as part of “full costs,” Copyright Act of 1909,
ch. 320, § 40, 35 Stat. 1075, 1084, and has reaffirmed
this rule in subsequent iterations of the Copyright
Act, including in the current statute. See Copyright
Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541, 2586.

Significantly, the “full costs” provision of the Cop-
yright Act predates the enactment of the Fee Act of
1853, which established the default federal rule for
costs and whose provisions are today embodied in 28
U.S.C. § 1920. See Act of Feb. 26, 1853 (“Fee Act”), ch.
80, 10 Stat. 161, 161; Crawford Fitting Co. v. J. T. Gib-
bons, Inc., 482 U.S. 437, 440 (1987). Congress has not

2 See, e.g., Memorandum of Points and Authorities in Support of
Motion for an Award of Attorneys’ Fees and Costs at 21-25, Wil-
liams v. Bridgeport Music, Inc., No. 13-cv-06004, 2016 WL
6822309 (C.D. Cal. Apr. 12, 2016), ECF No. 479-1 (discussing role
of musicologists and other experts in case involving infringement
of popular song); Defendant Warner/Chappell Music, Inc.'s Mem-
orandum of Points and Authorities in Support of Motion for
Award of Additional Costs; Declaration at 6, 30-42, Skidmore v.
Led Zeppelin, No. 15-cv-03462, 2016 WL 6674985 (C.D. Cal. Aug.
8, 2016), ECF No. 295-1 (same).

9

seen the need to alter the more specific rule for copy-
right cases.

Permitting courts to award full costs comports
with Congress’ statutory framework. The amount of
statutory damages awarded in a music infringement
action is highly discretionary, ranging from a mini-
mum of $200 to a maximum of $150,000 per work
infringed. See 17 U.S.C. § 504(c). Given the unpre-
dictability of damages awards, the ability to recover
full costs mitigates the possibility of a ruling that
finds liability but does not award significant damages.
If courts are not permitted to award full costs, the
plaintiff risks incurring large litigation costs for un-
certain damages. Even in cases that are resolved by
settlement before trial, the statutory right to seek full
costs may yield some amount of compensation for liti-
gation expenses until the time of settlement

High litigation costs for copyright cases are not a
theoretical concern; they are a real barrier to the en-
forcement of music copyrights. The Copyright Office
explained in a 2013 report to Congress that “[clopy-
right owners whose works are infringed often are
deterred from enforcing their rights due to the burden
and expense of pursuing litigation in the federal sys-
tem.” U.S. Copyright Office, Copyright Small Claims,
at 24 (Sept. 2013), https://www.copy-
right.gov/docs/smalliclaims/usco-smallcopyrightclaims
._pdf; see also id. at 13 (stating litigation costs “may
well persuade a party to forego bringing a lawsuit or
cause a party to settle on less than ideal terms”). This
unfortunate reality should not be compounded by ne-
gating the statutory right of a copyright owner to be

10

compensated for the actual costs of litigating after
prevailing on an infringement claim.

B. Widespread Online Infringement
Has Significantly Exacerbated the
Adverse Impact of the High Costs of

Copyright Litigation.

The development of the internet has transformed
music distribution. It also has transformed music pi-
racy, which can now be carried out with relative ease
on a massive scale. As a consequence, the litigation
costs associated with addressing music copyright in-
fringement have increased dramatically. Music
copyright owners have had to shift resources that
would otherwise be invested in the creation of new
music toward efforts to stem the tide of digital piracy.

Copyright litigation arising from online infringe-
ment of musical works and sound recordings
implicates a host of complicated technical issues.
Something as mundane as determining the identity of
the infringer can require significant litigation re-
sources. For example, a copyright owner may need to
file a “John Doe” action in federal court before it can
identify internet users associated with infringing ac-
tivity conducted through an online service provider.
See, e.g., In re Charter Commce’'ns, Inc., Subpoena Enft
Matter, 393 F.3d 771 (8th Cir. 2005) (music industry
plaintiffs could not obtain subpoenas to determine
identities of alleged online infringers without filing
action); Recording Indus. Ass’n of Am., Inc. v. Verizon
Internet Servs., Inc., 351 F.3d 1229 (D.C. Cir. 2003)
(same); see also U.S. Copyright Office, supra, at 18-19

11

(discussing the difficulty in identifying online infring-
ers).

In addition, the scale of piracy litigation has grown
enormously, as noted above. A recent lawsuit involv-
ing infringement of sound recordings on a single
online service provider's network included allegations
of more than one million acts of infringement. See
Plaintiffs’ Original Complaint at 2, ECF No. 1, UMG
Recordings, Inc. v. Grande Commc’ns Networks LLC,
No. 17-cv-365, (W.D. Tex. filed Apr. 21, 2017).

One of the largest drivers of costs in modern music
copyright litigation is expert fees. As copyright litiga-
tion involving online infringement of musical works
and sound recordings has become increasingly com-
plex, it has necessitated the use of experts to
document and analyze the data necessary to demon-
strate infringement or the failure to comply with other
requirements applicable to online providers under the
Copyright Act. These experts generate substantial
litigation costs that music industry litigants cannot
help but incur if they wish to protect the value of their
copyrighted works.

The recent case of BMG Rights Management (US)
LLC v. Cox Communications, Inc. well illustrates the

* For instance, Section 512 of the Copyright Act, enacted in 1998
as part of the Digital Millennium Copyright Act, provides a safe
harbor from infringement liability for online service providers if
they comply with certain requirements set forth in the statute,
including removal of infringing material upon receipt of a copy-
right owner's notice and adoption of a policy to track and
terminate repeat infringers. See generally 17 U.S.C. § 512.

12

costs involved in litigating a modern music infringe-
ment case. As is increasingly true of copyright
litigation, this action involved well over a thousand
copyrights, hundreds of thousands of infringers, and
millions of infringing acts. See BMG Rights Mgmt.
(US) LLC v. Cox Commce'ns, Inc., 149 F. Supp. 3d 634,
638, 640 (E.D. Va. 2015), affd in part, rev'd in part on
other grounds, 881 F.3d 293 (4th Cir. 2018). In order
to pursue its claims, BMG needed to conduct extensive
document and electronic discovery. Litigating the
case required the time-consuming task of piecing to-
gether incomplete, scattered records to demonstrate
that Cox repeatedly allowed egregious copyright in-
fringers to remain online. Brief in Support of BMG’s
Motion for Attorneys’ Fees and Costs at 7, ECF No.
828, BMG, 234 F. Supp. 3d 760 (No. 14-cv-1611); see
also BMG Rights Mgmt. (US) LLC v. Cox Commc'ns,
Inc., 234 F. Supp. 3d 760, 767 (E.D. Va. 2017), vacated
on other grounds, 881 F.3d 293 (4th Cir. 2018). More-
over, BMG had to take or defend 36 depositions of 28
witnesses, including 11 expert witnesses, which
amounted to approximately 270 hours of deposition
testimony. Brief in Support of BMG’s Motion for At-
torneys’ Fees and Costs at 27. BMG also had to
engage a team of experts to analyze and present evi-
dence to the jury. One expert was required to provide
testimony on the high-tech software used by plaintiffs’
agent to search websites to identify files that ap-
peared to contain plaintiffs’ musical works.
Declaration of Michael J. Allan in Support of Plaintiff
BMGQ’s Petition for Attorneys’ Fees and Expenses at
31, ECF No. 829, BMG, 234 F. Supp. 3d 760 (No. 14-
cv-1611). Another expert was required to confirm that
instances of infringement at particular IP addresses

13

related to the same Cox subscribers. /d. Still other
experts were needed to testify on the workings of Cox’s
automated system for processing (and rejecting) in-
fringement notices, as well as Cox’s profits from the
infringement on its network. /d. at 30. Finally, an-
other expert conducted a survey that established that
a substantial portion of Cox’s customers valued the
ability to use Cox’s network to infringe. /d. at 31.

Following trial, a jury found Cox liable for copy-
right infringement and awarded BMG $25 million in
statutory damages. BMG sought to recover its full
costs, which amounted to $2.92 million, the vast ma-
jority of which—over $2.44 million—were for expert
fees. Id. at 29, 31. Noting the circuit split on this is-
sue, however, the district court denied BMG’s motion
for costs, opining that such costs could not be
awarded.‘ BMG, 234 F. Supp. 3d at 778-80. Such an
outcome is inconsistent with both the letter and spirit
of the Copyright Act, which clearly allows trial courts
the discretion to reimburse the prevailing party for ex-
pert fees and other “nontaxable” costs.

Il. The Ability to Recover Full Costs Is Neces-
sary to Mitigate the Expense of Protecting
Music Copyrights.

The kinds of litigation costs discussed above have

‘ The district court awarded $8,383,468 in attorneys’ fees and
$146,791 in taxable costs, finding that Cox’s defense in the case
“lacked a basis in fact and was therefore objectively unreasona-
ble.” BMG Rights Mgmt. (US) LLC v. Cox Commce'ns, Inc., 234

; . ._D. Va. 2017), affd in part, rev'd in part
on other grounds, 881 F.3d 293 (4th Cir. 2018).

14

become increasingly common for music copyright own-
ers seeking to protect their works against
infringement. Understandably, then, music industry
plaintiffs seek to recover their full costs in appropriate
cases. Without such a recovery, the costs incurred to
litigate an infringement case may be grossly dispro-
portionate to a prevailing party’s recovery of damages.
Indeed, a prevailing party's costs may actually exceed
the amount of its recovery.

A. Awarding Full Costs Provides the
Proper Incentive Needed for Plain-

tiffs to Tackle Large-Scale
Infringement.

Without recovery of full costs, music publishers
and record companies can face disincentives when
considering the prospect of expensive litigation to
shut down an infringer. Take, for instance, the case
of Capitol Records, Inc. v. MP3tunes, LLC, in which
music company plaintiffs sued an online music service
for massive online infringement. No. 07-cv-9931,
2015 WL 13684546, at *1 (S.D.N.Y. Apr. 3, 2015). Af-
ter a lengthy trial, a jury delivered a resounding win
to the music companies, awarding some $48 million in
damages, which the court reduced to $23 million. /d.
at *1. In order to secure this judgment, plaintiffs in-
curred “in excess of $12 million in attorneys’ fees and
ensts.” Id. at *3.

The music industry plaintiffs sought to recover a
little over $4 million in attorneys’ fees and costs,
which included approximately $700,000 in “nontaxa-
ble” costs. See Capitol Records, Inc. v. MP3tunes,
LLC, No. 07-9931, 2015 WL 7271565, at *1 (S.D.NLY.

15

Nov. 12, 2015). These “nontaxable” costs related to
electronic discovery, trial support, travel, electronic
research, rebuttal expert fees, and consulting fees. /d.
at *6. The court awarded only a fraction of these “non-
taxable” costs, denying reimbursement for the
rebuttal experts and other professional services. /d.
In so doing, the court observed that other courts in the
district had held that the only costs recoverable were
those enumerated in 17 U.S.C. § 1920. /d. (citing Na-
ture’s Enters., Inc. v. Pearson, No. 08-cv-8549, 2010
WL 447377, at *10 (S.D.N.Y. Feb. 9, 2010) and U.S.
Media Corp. v. Edde Entm't, Inc., No. 94-cv-4849,
1999 WL 498216, at *7 (S.D.N.Y. July 14, 1999)). Per-
haps concerned with an overly harsh result, however,
despite denying professional fees, the court did allow
“reasonable out-of-pocket’ expenses incurred during
litigation as part of their attorneys’ fee award.” /d.
(quoting Berry v. Deutsche Bank Trust Co. Americas,
632 F. Supp. 2d 300, 306 (S.D.N.Y. 2009)).®

Given the ongoing threat of online music piracy,
there is a continuing need for music copyright owners

° The court awarded costs for the “types of routine costs awarded
to previous parties in trademark and copyright infringement ac-
tions.” Id. (quoting Gakm Resources LLC v. Jaylyn Sales Inc.,
No. 08-cv-6030, 2009 WL 2150891, at *10 (S.D.N_Y. July 20,
2009) (interna! quotation marks omitted)). The allowed costs,

travel. Id. After the court made this award, the parties entered
into a global settlement of all issues, including costs and fees.
See Stipulation and Order Adjourning Action and Approving
Conditional Final Consent Judgment, ECF No. 760, Capitol Rec-
ords, Inc. v. MP3tunes, LLC, No. 07-cv-9931 (S.D.N.Y. Jan. 26,
2018).

16

to take legal action to protect the value of their musi-
cal works and sound recordings and the livelihoods of
those who create them.® The practical ability to pur-
sue challenging litigation is essential not only to stop
piracy and compensate copyright owners and creators
for unauthorized uses, but to protect and foster the le-
gitimate online marketplace. Given the need to
gather and analyze vast amounts of data in complex
copyright cases, the ability to seek full costs—that is,
the true costs of litigation—is necessary to preserve
the proper balance of incentives in the copyright sys-
tem. Otherwise, music industry plaintiffs will be left
undercompensated and hamstrung in their ability to
pursue claims against the most threatening infring-

ers.

B. Defendants and Claimants in
Smaller Copyright Cases Also Rely
on the Ability to Recover Full Costs.

1. Defendants Need Full Cost Re-
covery as a Deterrent to
Meritless Litigation

Music publishers and record labels are also at
times called upon to defend against meritless copy-
right infringement litigation. The ability to recover

® Examples of such ongoing litigation efforts include UMG Re-

cordings, Inc. v. Grande Communications, No. 17-cv-365
(W.D. Tex. filed Apr. 21, 2017), Sony Music Entertainment v. Cox
Communications, Inc., No. 18-00950 (E.D. Va. filed July 31,
2018), Atlantic Recording Corporation v. Spinrilla, LLC, No. 17-
ev-431 (N.D. Ga. filed Feb. 3, 2017), and UMG Recordings, Inc. v
Kurbanov, No. 18-cv-957 (E.D. Va. filed Aug. 3, 2018).

17

costs in defending against baseless claims not only
serves to compensate responding parties for frivolous
actions, but also to deter bad-faith actors who must
face the risk of having to pay those costs as a losing

party.

Pringle v. Adams illustrates why the Ninth Cir-
cuits statutory interpretation correctly allows
awarding of full costs. No. 10-cv-01656, 2014 WL
3706826 (C.D. Cal. July 23, 2014). In Pringle, several
music industry defendants were sued for supposed in-
fringement of a song. /d. at *1. After winning on
summary judgment, the defendants sought full costs,
including approximately $300,000 of “nontaxable”
costs for expert witness fees, online legal research
charges, deposition costs, and court expenses. /d.
at *7; Defendants’ Supplemental Brief in Further
Support of Motion for an Award of Attorneys’ Fees and
Full Costs at 15, ECF No. 304, Pringle, 2014 WL
3706826 (No. 8:10-cv-1656). In its order granting at-
torneys’ fees and costs, the court referenced that the
Ninth Circuit had affirmed summary judgment on ap-
peal in part because plaintiff's evidence “raise[d] only
the barest possibility” that defendants had access to
plaintiffs song. Pringle, 2014 WL 3706826, at *2. Re-
lying on Ninth Circuit precedent, the court
compensated the prevailing defendants for the unwar-
ranted cost of defending against meritless claims.
Pringle, 2014 WL. 3706826, at *7-8 (citing Twentieth
Century Fox Film Corp. v. Entm’t Distrib., 429 F.3d
869, 885 (9th Cir. 2005)).

Similarly, a New York court awarded costs to the
defendants in Mayimba Music, Inc. v. Sony/ATV

18

Latin Music Publishing LLC, which involved the
rightful ownership of a song popularized by Shakira.
Order Denying Plaintiffs Motion to Vacate Judgment,
and Granting Defendants’ Motion for Sanctions at 1,
ECF No. 256, Mayimba Music, Inc. v. Sony/ATV
Latin Music Publishing LLC, No. 12-cv-1094
(S.D.N.Y. Mar. 31, 2016). After concluding that the
plaintiff lacked a valid copyright because it had fab-
ricated the date on which it had authored its work, the
court, exercising its discretion in light of defendant's
bad faith, awarded $50,000 of “nontaxable” costs in
addition to attorneys’ fees accrued from the date of a
crucial motion in the case. /d. at 1-3; Order Approving
Application for Attorney's Fees at 1-2, ECF No. 268,
Mayimba Music, Inc. v. Sony/ATV Latin Music Pub-
lishing LLC, No. 12-cv-1094 (S.D.N.Y. June 9, 2016).

The cost awards in such cases help to ensure that
defendants are not cowed into settling meritless
claims simply because of the expense required to vin-
dicate their copyrights. At the same time, they reduce
the incentives for disingenuous actors to bring frivo-
lous litigation.

2. Absent the Ability to Recover
Full Costs, Music Litigants May
Lose More Than They Win.

A rule precluding courts from awarding full costs
would also be detrimental to copyright owners seeking
to bring modest-sized infringement claims, particu-
larly in light of the lower damages awarded in such
cases.

Claimants with smaller infringement claims face

19

formidable challenges in enforcing their copyrights.
U.S. Copyright Office, supra, at 3. “Especially in the
case of lower-value copyright claims, the potential for
monetary recovery can be quickly overcome by the
costs of discovery, motion practice, and other litiga-
tion expenses.” /d. at 24. Indeed, litigation costs are
generally disproportionately large in cases with mod-
est-sized claims. /d. at 24-25. These problems are
compounded when courts do not fully compensate pre-
vailing parties for their costs in bringing the case. By
excluding costs related to discovery or experts, courts
deter copyright owners from asserting meritorious
claims, as the costs of litigating can outweigh the re-
covery.

In Tempest Publishing, Inc. v. Hacienda Records &
Recording Studio, Inc., for example, the court
awarded $5,000 in damages for infringement of the
plaintiffs song. 141 F. Supp. 3d 712, 717 (S.D. Tex.
2015). The prevailing party's litigation costs were
more than three times that amount, however, and the
court denied recovery of the plaintiffs “nontaxable”
costs, which amounted to over $4,000. Jd. at 724-26;
Plaintiffs Bill of Costs at 2-3, ECF No. 131, Tempest,
141 F. Supp. 3d 712 (No. 4:12-cv-736). In the end, the
prevailing party achieved a largely Pyrrhic victory.
The inability to recover full costs in such a case, not-
withstanding the express language of the Copyright
Act, renders enforcement of one’s copyright a losing

proposition.

20
CONCLUSION

For the foregoing reasons, the Ninth Circuit's judg-
ment should be affirmed.

Respectfully submitted.
Jacqueline C. Charlesworth Beth S. Brinkmann
COVINGTON & BURLING LLP Counsel of Record
620 Eighth Avenue Rafael Reyneri
New York, NY 10018 COVINGTON & BURLING LLLP
(202) 841-1000 850 Tenth Street, NW
jcharlesworth@cov.com Washington, DC 20001
bbrinkmann@cov.com
(202) 662-6000

December 20, 2018 Counsel for Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0829%3A15. Public record. Not legal advice.